Export Processing zones in India

companies´ exports from indirect taxes (such as sales taxes), border taxes and import charges.
Duty drawbacks and duty exemptions on inputs "consumed in the production process" (i.e.,
inputs that are physically incorporated into the exported product, and energy fuel and catalysts
used in the production process) are also permissible. However, special care would be needed to
ensure that these measures are applied in a manner consistent with the WTO rules, by
maintaining proper bookkeeping and accounting practices. There is still the risk that some of
these subsidies may nevertheless be actionable, and hence subject to possible countervailing
measures. Thus the system of incentives that is contingent upon export performance in either law
or fact may not be sustainable. It is therefore important to strengthen and streamline the system
of permissible incentives. Some of the measures suggested by sampled EPZ firms to achieve this
are as follows
• simplify rules and processes of incentives,
• implement and govern them effectively,
• streamline the processes of availing them
• avoid delays and corruption in the system.
Two, government must now focus on creating an efficient environment capable of improving
the performance of EPZs. Rapid development of modern and world class infrastructure can
significantly contribute to the competitiveness of the zones. But the cost of development of the
quality infrastructure may be substantial. We have three suggestions to make. One, adopt a target
based approach. It is important to examine what are the major infrastructural deficiencies in each
zone. In Santacruz SEZ, for example lack of space is a major problem while in Falta and Surat
financial infrastructure, connectivity of the zones with ports, airports and the cities, water, power
and solid waste disposal facilities need immediate attention. The nearest airport for Kandla units
is at the distance of 65 km.. They are demanding airport at Gandhidham. Canteen facilities and
water supply are stated to be poor in Chennai. Respondents reveal that infrastructure facilities
have improved in Cochin SEZ but the problems of inadequate water supply and lack of
warehousing facilities persist. These deficiencies need to be addressed on a priority basis. Two,
privatise the provision and maintenance of these services and allow competition among the
service providers. This would ensure better facilities at reasonable charges. Though the private
sector has been allowed to provide infrastructure facilities in the zones since 1994, zones do not
report any major involvement of the private sector in providing these facilities. Finally, develop
residential facilities and social utilities. Since the size of the existing zones is small in India, it
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